Have we mortgaged all our
EYE-WATERING COST OF REPAYMENTS REVEALED
Newcastle Library, part of a PFI project Reporter UNDER-FIRE Private Finance Initiative schemes carried out in the North East will end up costing the public £12bn, we can reveal.
We have analysed Treasury figures which show a total of 45 completed projects in this region which have a capital value of £2.28bn.
The projects include a wide-ranging hospital building programme, new schools, roads, libraries, street lighting, waste management plants and new fire stations.
The PFI idea of funding public infrastructure schemes with private capital was developed by John Major’s Conservative party in the 1990s.
It was embraced by Labour when thenChancellor Gordon Brown signed off hundreds of contract to keep debt off the Government’s books.
In the North East, all but eight of the 45 schemes were signed off under Labour. There is Gordon Brown championed PFI schemes one ongoing PF2 scheme.
During the Labour party conference last week, Shadow Chancellor John McDonnell said: “The scandal of the private finance initiative has resulted in huge long-term costs for taxpayers while providing enormous profits for some companies.
“Over the next few decades, nearly £200bn is scheduled to be paid out of public sector budgets in PFI deals. In the NHS alone, £831m in pre-tax profits have been made over the past six years.”
He spoke of bringing PFI contracts ‘in house’ - even ‘nationalising’ the debt.
At present the payments are met by the ‘procuring authorities’ who ordered them - a mixture of Government departments, local authorities and NHS Foundation Trusts.
If Labour were elected to Government next year and nationalised the debt, it would cost The James Cook University Hospital was relaint upon PFI money £8.9bn to cover the outstanding payments left for the North East contracts alone.
Among them, the most eye-catching in terms of finance numbers are hospitals.
In all, 10 have been built across Northumberland, Tyne and Wear, County Durham and Teesside, through PFI with a capital value of £783.7m. By the time repayments have been completed over contracts lasting sometimes over 30 years which include maintenance bills, £4.9bn will have been handed over.
The schemes include the so-called ‘Transforming the Newcastle Hospitals’ programme.
The major building and reorganisation project saw facilities at the Royal Victoria Infirmary and Freeman hospitals in Newcastle, improved in what was described as the largest healthcare modernisation programme in the North East, which included the development of the Great North Children’s Hospital.
It increased the number of beds and operating theatres, and provided more modern medical facilities such as laboratories and radiology services.
According to the Treasury, the capital value of the project was £298.6m. Over the 38-year contract period with the private developers, the repayments add up to £1.5bn.
In a statement, Newcastle Hospitals NHS Foundation Trust said: “Our first priority is to provide the highest quality care to our patients, and that includes providing that care in the best possible environment.
“As an organisation with an annual income of around £1bn we have a strong track record of investing in the environment in which we provide care.
“All new NHS buildings have to be paid for, either by the Treasury or the private sector, and without PFI we could not have afforded the level of investment that we have seen in our